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News Bureau of Labor Statistics Technical Contact: (202) 691-6199 ocltinfo@bls.gov Media Contact: (202) 691-5902 Internet address: http://www.bls.gov/ncs/ocs/home.htm United States Department of Labor Washington, D.C. 20212 USDL: 05-2382 FOR RELEASE: 10:00 A.M. (EST) WEDNESDAY, DECEMBER 28, 2005 (This news release was reissued on Wednesday, May 26, 2010, to remove table asterisks that have incorrectly indicated statistically significant differences between some estimates. News release text references to statistical significance have also been removed. Pay relative estimates have not changed. For more information, see http://www.bls.gov/ncs.) OCCUPATIONAL PAY RELATIVES, 2004 The Bureau of Labor Statistics (BLS) of the U.S. Department of Labor has produced occupational “pay relatives” to facilitate comparisons of occupational pay between metropolitan areas and the United States as a whole. BLS periodically has issued occupational pay relatives using data from the National Compensation Survey (NCS) and its predecessor surveys, and now plans to publish them annually. Using data for 2004 from the NCS, pay relatives have been prepared for each of 9 major occupational groups within 78 Metropolitan Statistical Areas (MSAs), as well as averaged across all occupations for each area. The pay relative in 2004 for workers in construction and extraction occupations in the San Francisco MSA was 127, meaning the pay in San Francisco in that occupational group averaged 27 percent more than the national average pay for workers in that occupational group (table 1). The pay relative averaged across all occupations for workers in the San Francisco MSA was 117, meaning that pay on average was 17 percent more in that area than for the nation as a whole. By contrast, the pay relative for workers in construction and extraction occupations in the Brownsville, TX MSA, was 70, meaning pay for workers in those occupations averaged 30 percent less than the national average. Pay averaged across all occupations in the Brownsville MSA was 19 percent below the national average. The pay relatives averaged for workers in all occupations in San Francisco and Brownsville were, respectively, the highest and lowest among the 78 areas. In addition to these examples of area-to-national comparisons, area-to-area comparisons can be derived using these pay relatives. The National Compensation Survey (NCS), introduced in 1997, collects earnings and other data on employee compensation covering over 820 detailed occupations in 152 metropolitan and non-metropolitan areas. Average occupational earnings from the NCS are published annually for more than 80 metropolitan areas and for the United States as a whole. What is a pay relative? 2 A pay relative is a calculation of pay—wages, salaries, commissions, and production bonuses—for a given metropolitan area relative to the nation as a whole. The calculation controls for differences among areas in occupational composition, establishment and occupational characteristics, and the fact that data are collected for areas at different times during the year. Metropolitan areas differ greatly in the types of occupations that are available to the local workforce. For example, the proportion of San Francisco's workers who are employed as computer programmers is approximately 48 percent greater than the national average.i Similarly, the composition of establishment and occupational characteristics—such as whether an establishment is for profit or not-for-profit or whether an occupation is union or nonunion—varies by area. In addition to these factors, the NCS collects compensation data for metropolitan areas at different times during the year. Payroll reference dates differ between areas which makes direct comparisons between areas difficult. The pay relative approach controls for these differences to isolate the geographic effect on wage determination. To illustrate the importance of controlling for these effects, consider the following example. The average pay for professional workers in San Francisco is $38.66 and the average pay for professional workers in the entire US is $29.40.ii A simple pay comparison can be calculated from the ratio of the two average pay levels, multiplied by 100 to express the comparison as a percentage. The pay comparison in the example is calculated as: $38.66 $29.40100 131 However, this comparison does not control for the interarea difference in occupational composition. Some of the 31 percent pay premium in San Francisco relative to the nation as a whole is due to the higher concentration of highly compensated professional workers—such as computer programmers—in San Francisco. A more accurate estimate of the geographic effect on wage determination in San Francisco can be obtained by taking into account this and other differences. Controlling for the differences in occupation composition, establishment and occupational characteristics, and the payroll reference date in San Francisco relative to the nation as the whole, the pay relative for professional occupations in San Francisco is equal to 118. Using multivariate regression analysis A statistical technique called multivariate regression analysis controls for interarea differences. It controls for the following ten characteristics: Occupational type Industry type Work level Full-time / part-time status Time / incentive status Union / nonunion status Ownership type Profit / non-profit status Establishment employment Payroll reference date 3 Even accounting for these characteristics, there is still wage variation across the areas. The variation is due to differences in wage determinants that were not included in the model. Examples of these determinants include price levels, environmental amenities such as a pleasant climate, and cultural amenities. For more detailed information on the pay relative methodology, see Maury B. Gittleman, "Pay Relatives for Metropolitan Areas in the U.S.," Monthly Labor Review, March 2005, pp. 46-53. Results Table 1 presents July 2004 pay relatives averaged across all occupations covered by the NCS survey and nine occupational groups in 78 metropolitan areas. This table represents the first presentation of NCS wage data using the 2000 Standard Occupational Classification System (SOC). For more detailed information on SOC, see the BLS website: http://www.bls.gov/soc/home.htm. The occupational groups are: (1) (2) (3) (4) (5) (6) (7) (8) (9) management, business, and financial occupations professional and related occupations service occupations sales and related occupations office and administrative support occupations construction and extraction occupations installation, maintenance, and repair occupations production occupations transportation and material movement occupations Comparisons between areas The pay relatives presented in Table 1 are area-to-national comparisons. However, it is easy to derive area-to-area comparisons from them. To do so, divide the pay relative for the occupational group and area in question by the pay relative for the same occupational group in the area to which the first is being compared. Then multiply the result by 100 so that the comparison is expressed as a percentage. For example, the pay relative for professional occupations in San Francisco is 118 and the pay relative for professional occupations in Los Angeles is 111. The San Francisco-to-Los Angeles pay relative for professional occupations is calculated as: 118 111100 106 In the example, there is approximately a 6 percent pay premium for professional occupations in San Francisco relative to the same occupational group in Los Angeles. Differences between the 2004 pay relatives and historical pay relatives Historical pay relative data are available for 2002iii, 1998iv, and 1992–1996.v There are several differences between the 2004 pay relatives and the historical pay relatives, including different industry and occupation classification systems, varying methodology, and different survey designs. These differences limit comparability. 4 The 2004 pay relatives use the 2002 North American Industry Classification System (NAICS) to define industry type. Occupation type and the occupational groups presented in Table 1 are defined using the Standard Occupational Classification System (SOC). The 2002 and 1992–1996 pay relatives defined industry type using the Standard Industry Classification (SIC) system. Occupation type and occupational groups for the 2002, 1998, and 1992–1996 pay relatives were defined using the Occupational Classification System (OCS). The 2004 and 2002 pay relatives used a similar multivariate regression technique methodology to calculate pay relatives. The 1998 and 1992–1996 pay relatives were calculated using a weighted cell means methodology. The methodology controlled for fewer characteristics: Occupational type Work level Payroll reference date The 2004, 2002, and 1998 pay relatives were derived from the National Compensation Survey (NCS). The 1992–1996 pay relatives were derived from the Occupational Compensation Survey (OCS). The NCS and OCS have significantly different sample designs. For example, the OCS collected wage data for sampled establishments with 50 or more employees. The NCS collects data for all sampled establishments. Additionally, the OCS collected wage data for a fixed list of jobs. The NCS collects wage data for randomly selected jobs. 91 111 103 95 97 94 93 112 81 102 96 98 106 101 101 97 88 99 99 102 106 94 97 104 87 99 96 113 99 104 97 97 98 100 87 98 95 92 107 100 92 96 Amarillo, TX ...................................................... Anchorage, AK ................................................. Atlanta, GA ....................................................... Augusta-Aiken, GA-SC ..................................... Austin-San Marcos, TX ..................................... Birmingham, AL ................................................ Bloomington, IN ................................................ Boston-Worcester-Lawrence, MA-NH-ME-CT .. Brownsville-Harlingen-San Benito, TX ............. Buffalo-Niagara Falls, NY ................................. Charleston-North Charleston, SC ..................... Charlotte-Gastonia-Rock Hill, NC-SC ............... Chicago-Gary-Kenosha, IL-IN-WI ..................... Cincinnati-Hamilton, OH-KY-IN ........................ Cleveland-Akron, OH ........................................ Columbus, OH .................................................. Corpus Christi, TX ............................................ Dallas-Fort Worth, TX ....................................... Dayton-Springfield, OH ..................................... Denver-Boulder-Greeley, CO ........................... Detroit-Ann Arbor-Flint, MI ................................ Elkhart-Goshen, IN ........................................... Fort Collins-Loveland, CO ................................ Grand Rapids-Muskegon-Holland, MI .............. Great Falls, MT ................................................. Greensboro-Winston Salem-High Point, NC .... Greenville-Spartanburg-Anderson, SC ............. Hartford, CT ...................................................... Hickory-Morganton-Lenoir, NC ......................... Honolulu, HI ...................................................... Houston-Galveston-Brazoria, TX ...................... Huntsville, AL .................................................... Indianapolis, IN ................................................. Iowa City, IA ..................................................... Johnstown, PA .................................................. Kansas City, MO-KS ......................................... Knoxville, TN .................................................... Lincoln, NE ....................................................... Los Angeles-Riverside-Orange County, CA ..... Louisville, KY-IN ............................................... Melbourne-Titusville-Palm Bay, FL ................... Memphis, TN-AR-MS ....................................... See footnotes at end of table. 100 All occupations United States .................................................... Metropolitan Area1 94 95 87 105 93 108 103 89 107 88 104 107 98 94 99 102 92 88 101 85 95 93 95 101 90 95 103 93 101 102 110 78 92 105 97 103 89 110 101 94 95 104 100 Management, business, and financial 89 84 93 91 87 111 102 86 109 93 106 102 99 98 98 107 99 95 100 83 98 94 98 101 96 93 100 96 99 87 109 95 97 98 91 103 87 109 99 97 95 97 100 Professional and related (Average pay nationally for all occupations and for each occupational group shown = 100.) 93 90 98 89 95 111 105 95 124 98 107 88 95 96 104 101 92 97 101 92 97 93 104 99 96 84 95 94 101 93 114 81 108 86 94 105 89 119 102 89 102 97 100 Service 94 90 105 92 91 109 98 96 114 90 105 98 96 82 91 98 95 96 106 82 88 91 104 97 100 90 101 102 97 96 106 80 100 93 102 108 88 101 107 88 100 92 100 Sales and related 92 83 101 99 90 107 100 92 111 100 102 97 97 104 103 108 92 99 100 81 100 99 100 99 99 86 100 96 101 88 117 81 102 99 101 108 90 107 105 93 102 92 100 Office and administrative support Table 1. Pay relatives for major occupational groups in metropolitan areas, National Compensation Survey, July 2004 111 84 103 86 82 110 104 90 138 81 102 94 89 95 104 110 99 99 106 122 93 90 102 96 112 80 96 99 96 98 117 70 101 81 89 123 89 130 103 88 93 76 100 Construction and extraction 103 107 94 92 96 109 91 101 111 97 107 95 95 99 92 104 87 100 101 100 102 88 98 105 98 84 98 99 106 92 111 80 101 89 98 105 90 108 108 98 103 100 100 Installation, maintenance, and repair 94 85 109 93 94 97 92 89 112 103 94 96 98 106 99 115 95 96 107 101 104 103 108 106 92 90 94 112 104 98 109 73 105 93 104 103 110 122 100 99 90 93 100 Production 101 80 100 94 95 101 99 100 110 111 106 93 94 104 105 109 94 100 107 88 104 97 100 105 98 85 99 104 104 101 119 77 101 102 103 109 97 114 103 96 87 94 100 Transportation and material moving 5 107 98 96 107 102 97 100 108 104 99 100 99 99 101 108 110 92 108 117 105 94 89 98 86 94 98 105 98 98 Portland-Salem, OR-WA .................................. Providence-Fall River-Warwick, RI-MA ............ Reading, PA ..................................................... Reno, NV .......................................................... Richland-Kennewick-Pasco, WA ...................... Richmond-Petersburg, VA ................................ Rochester, NY .................................................. Rockford, IL ...................................................... Sacramento-Yolo, CA ....................................... Salinas, CA ....................................................... San Antonio, TX ............................................... San Diego, CA .................................................. San Francisco-Oakland-San Jose, CA ............. Seattle-Tacoma-Bremerton, WA ...................... Springfield, MA ................................................. Springfield, MO ................................................. St. Louis, MO-IL ................................................ Tallahassee, FL ................................................ Tampa-St. Petersburg-Clearwater, FL ............. Visalia-Tulare-Porterville, CA ........................... Washington-Baltimore, DC-MD-VA-WV ........... York, PA ........................................................... Youngstown-Warren, OH ................................. 108 101 94 107 88 95 86 90 105 102 112 117 93 117 118 98 93 110 101 95 99 97 97 108 101 96 93 88 88 89 115 97 95 104 93 93 Professional and related 105 97 88 106 89 95 84 92 98 98 113 111 87 111 121 116 109 117 103 102 105 99 107 106 94 99 91 87 88 86 110 91 100 119 85 83 Service 101 102 101 110 88 105 99 106 101 93 108 119 97 111 113 103 102 113 103 111 105 99 96 112 130 94 98 91 91 100 107 94 120 105 88 109 Sales and related 110 93 87 110 86 98 88 93 96 93 106 110 95 103 120 105 102 109 102 91 92 98 95 108 106 99 96 97 89 92 114 93 102 105 92 84 103 91 99 107 83 112 91 88 87 111 105 118 79 108 127 115 108 98 100 101 99 88 95 106 90 91 87 81 86 87 127 84 105 116 91 85 Office and Construction administrative and extraction support 1 A metropolitan area can be a Metropolitan Statistical Area (MSA) or Combined Statistical Area (CSA) as defined by the Office of Management and Budget, 1994. 101 106 89 103 91 95 83 99 95 84 106 108 91 109 117 95 97 103 108 93 98 95 101 94 98 86 91 111 110 93 92 91 91 98 100 103 90 87 Management, business, and financial 93 105 109 90 90 All occupations Norfolk-VA Beach-Newport News, VA-NC ....... Ocala, FL .......................................................... Oklahoma City, OK ........................................... Orlando, FL ....................................................... Philadelphia-Wilmington-Atlantic City, PA-NJ-DE-MD ................................................ Phoenix-Mesa, AZ ............................................ Pittsburgh, PA ................................................... Miami-Fort Lauderdale, FL ............................... Milwaukee-Racine, WI ...................................... Minneapolis-St. Paul, MN-WI ........................... Mobile, AL ......................................................... New Orleans, LA .............................................. New York-Northern New Jersey- Long Island, NY-NJ-CT-PA ................................................. Metropolitan Area1 (Average pay nationally for all occupations and for each occupational group shown = 100.) Table 1. Pay relatives for major occupational groups in metropolitan areas, National Compensation Survey, July 2004 — Continued 101 100 96 109 90 95 79 101 99 115 112 109 83 108 116 102 105 88 98 114 92 97 89 107 106 95 92 94 93 104 100 93 111 108 90 89 Installation, maintenance, and repair 102 94 111 110 95 97 83 93 93 107 106 100 100 100 110 108 99 100 104 93 104 101 102 101 102 94 86 86 97 90 102 89 117 111 91 86 Production 98 101 111 65 94 109 108 100 91 103 110 96 95 102 113 105 103 115 108 100 100 104 100 108 100 101 93 104 93 92 113 92 107 119 98 94 Transportation and material moving 6 7 Technical Note The pay relatives in this release, as with estimates from any sample survey, are subject to sampling and non-sampling errors. Sampling errors are differences that occur between the pay relatives estimated from the sample and the true pay relatives derived from the population. Pay relatives are also subject to a variety of nonsampling errors that can influence the estimates. The NCS may be unable to obtain information for some establishments; there may be difficulties with survey definitions; respondents may be unable to provide correct information, or mistakes in recording or coding the data may occur. Non-sampling errors of these kinds were not specifically measured. However, they are expected to be minimal due to the extensive training of the field economists who gathered the survey data, computer edits of the data, and detailed data review. For more details, see Maury B. Gittleman, "Pay Relatives for Metropolitan Areas in the NCS" Monthly Labor Review, March 2005, pp. 46-53, and Parastou Karen Shahpoori, "Pay Relatives for Major Metropolitan Areas," Compensation and Working Conditions Online, April 28, 2003. i The proportion of computer programmers in San Francisco relative to the nation as a whole was calculated using total employment estimates found in the November 2004 Metropolitan Area Occupational Employment and Wage Estimates publication, http://www.bls.gov/oes/current/oessrcma.htm. ii Average pay for professional workers in San Francisco and for the United States are based on wage estimates published in the San Francisco–Oakland–San Jose, CA National Compensation Survey, April 2004 and the National Compensation Survey: Occupational Wages in the United States, July 2004, http://www.bls.gov/ncs/ocs/compub.htm. iii For more information, see Maury B. Gittleman, "Pay Relatives for Metropolitan Areas in the U.S.," Monthly Labor Review, March 2005, pp. 46-53. iv For more information, see Parastou Karen Shahpoori, "Pay Relatives for Major Metropolitan Areas," Compensation and Working Conditions, Spring 2003. v For more information, see the Occupational Compensation Survey Publications List (1992-1996), http://www.bls.gov/ncs/ocspubs.htm.